Fostering Successful Technical Assistance Partnerships

This paper discusses the various features of the relationship between MFIs and their partners for technical assistance. It is based on the experience of ASA in providing technical assistance to MFIs in various countries.

The objective of the paper is to present one possible way to structure this technical assistance. The paper states that the MicroStart program of the United Nations Development Program (UNDP) and the Special Unit for Microfinance (SUM) depends on microfinance practitioners, private firms and international non-governmental organizations (NGOs) to provide technical assistance to MFIs:

• MicroStart’s objectives for technical service providers (TSPs) are to:
  • Increase outreach;
  • Attain sustainability;
  • Maintain portfolio quality.
• ASA focuses first on developing a cost-effective methodology.

The paper also discusses ASA’s approach to designing and delivering technical assistance. It lists 4 areas of concern experienced by ASA:

• System development and installation;
• Funding arrangements;
• Management upgrading;
• Governance improvement.

The paper recommends that:

• MFIs should enter into agreements about indicators such as growth of borrowers, operational sustainability and an acceptable portfolio quality;
• TSPs should assist MFIs in monitoring and reaching their goals;
• MicroStart advisory board should be responsible to stop funding MFIs that do not meet targets;
• Local TSPs should be part of the international team and should not have an independent role.

The paper concludes by suggesting alternative means of providing technical assistance.